FactSet Research Systems Inc (NYSE:FDS) Demonstrates Superior Capital Efficiency and Growth

Financial data providers are central to current investment analysis, and one firm that has reliably provided worth in this area is FactSet Research Systems Inc (NYSE:FDS). The Caviar Cruise investment screen, based on Belgian author Luc Kroeze's quality investing approach, looks for firms displaying outstanding operational performance and lasting growth prospects. This system favors businesses with solid historical results, effective capital use, and sound financial condition, traits that usually point to lasting competitive strengths and management skill.

Revenue and Profitability Growth

FactSet shows the steady enlargement that quality investors look for. The firm has reached a 5.45% compound annual growth rate in revenue over the last five years, easily passing the screen's 5% minimum level. More notably, FactSet's EBIT growth of 11.22% per year greatly surpasses its revenue growth, pointing to better operational effectiveness and possible pricing strength. This EBIT growth being higher than revenue growth is especially significant in quality investing as it implies the firm is reaching scale benefits or has the capacity to raise prices without matching cost rises.

Outstanding Capital Efficiency

The main element of the Caviar Cruise system is return on invested capital, where FactSet performs well with a very high ROIC excluding cash, goodwill, and intangibles of 272.31%. This notably high number shows superior capital use effectiveness, meaning FactSet produces large returns from each dollar put into its main activities. For quality investors, a high ROIC frequently points to a lasting competitive edge—what Warren Buffett could name an "economic moat"—as it shows the firm's capacity to put profits back to work at high return rates.

Financial Health and Cash Flow Quality

FactSet's financial steadiness matches quality investing rules well:

• Debt-to-Free Cash Flow ratio of 2.22 years, much lower than the 5-year maximum level
• Five-year average profit quality of 117.82%, above the 75% necessity
• Steady positive earnings and operating cash flow over many years

The low debt-to-FCF ratio shows FactSet could pay back all due debt in just over two years using present cash flow, giving major financial adaptability. The profit quality measure being over 100% is especially important as it shows the firm changes more than 100% of its accounting profit into real free cash flow—a mark of superior earnings caliber and effective working capital handling.

Full Fundamental Review

According to the thorough fundamental analysis, FactSet gets an overall score of 6 out of 10 compared to industry counterparts. The firm shows excellent profitability with scores of 8/10, led by better returns on assets (13.87%), equity (27.31%), and invested capital (16.34%) that do better than most rivals. Financial health scores a firm 6/10, backed by workable debt levels and sufficient liquidity ratios. While valuation seems fair with a score of 5/10, growth measures at 5/10 display some slowing in revenue enlargement outlooks in spite of solid historical performance.

Quality Investing Points Outside the Figures

Beyond the numerical data, FactSet displays several non-number traits that quality investors appreciate. The firm works in a field with high changeover expenses, as financial experts become deeply set in their data systems. Its worldwide reach across Americas, EMEA, and Asia Pacific gives variety and several growth paths. The business plan is fairly simple—supplying financial data and analytics—making it simpler for investors to grasp its activities and competitive standing. Also, the necessary character of financial data in investment choice-making offers some downturn steadiness, though not full protection.

Reviewing Other Quality Possibilities

FactSet stands for just one possible option found through the Caviar Cruise system. Investors curious about finding other firms meeting these strict quality rules can review the full screen outcomes to see extra investment chances.

Disclaimer: This article presents factual information and analysis for educational purposes only and should not be construed as investment advice, a recommendation to buy or sell any security, or an endorsement of any particular investment strategy. Investors should conduct their own research and consult with financial advisors before making investment decisions.